The electric vehicle (EV) era has begun. According to the White House, there are already more than 3 million EVs on the road in the United States. What’s more, the International Energy Agency estimates that by 2030, EVs will make up more than 60% of vehicles sold.
With that in mind, let’s turn our attention to the company that is miles ahead in the race for EV supremacy: Tesla (TSLA).
Why Tesla is crushing the competition
There are many reasons to own Tesla, but in this article I want to focus on the company’s massive competitive advantages. Think about it: Tesla’s current market capitalization is larger than those of most of its competitors combined.
Why is Tesla so much bigger? In a nutshell, the company has lapped its competition. Consider a few examples:
- Epic Brand Recognition: Tesla famously spends no money on ads. Contrast that with its competitors like General Motors, Ford, Toyota Motors, and Volkswagen. Toyota, the largest vehicle maker by volume, spent $1.7 billion on advertising in 2021.
- Enormous Head Start: Founded in 2003, Tesla has singularly focused on EVs since its start. That means every aspect of design and production has concentrated on what will make for an attractive, efficient, and practical EV. Meanwhile, some of Tesla’s competitors are struggling to scale up their EV production and sell EVs at a profit.
- Innovation and Vision: Elon Musk has his detractors, but it’s hard to argue with his results. Take Tesla’s mission statement, for example. In part, it reads, “We’re building a world powered by solar energy, running on batteries and transported by electric vehicles.”
The company’s vision means EVs are only one part of a larger project to power the world sustainably. That enormous vision has led Tesla to innovate in many critical areas for EV success: battery life, charging stations, and safety.
Why I want to buy more now
Tesla’s stock has sagged in the last 12 months. Shares are down 43% over that period. However, it’s uncertain how much of that results from Elon Musk’s stock sales. Mr. Musk sold over $22.9 billion worth of Tesla stock in 2022 to help fund his purchase of Twitter.
Tesla’s fundamentals remain more than solid. Revenue is growing at 37% year-over-year, and net income hit a record high of $12.6 billion in 2022. Moreover, the company produced over one million vehicles last year, marking a key milestone in becoming the world’s largest vehicle maker.
The additions of the cybertruck and semi to the Tesla lineup should bolster sales, while the expanded EV tax credits and price cuts should make the vehicles more affordable to a broader customer base.
Tesla remains the cream of the EV crop
Tesla is the best and most advanced EV maker today. It’s led by a visionary who sees his EV company as just one part of a bigger goal to bring sustainable energy to the world. And perhaps most importantly from an investing perspective, the company’s fundamentals are solid and supported by growing demand and sales. For those reasons and more, I’m buying more Tesla shares.
— Jake Lerch
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Source: The Motley Fool